This paper discusses mediation in bankruptcy.
Mediation, unlike other forms of ADR, is not a form of adjudicative proceeding. Instead, it is a process designed to maximize collective agreement. Although mediation may be used in other chapters, it has become an especially useful tool in the context of structuring Chapter 11 plans. Mediation in Chapter 11 gives the debtor’s attorney freedom in negotiating with creditors about the terms of the plan, while still focusing on continuing the operations of the debtor company. Successful mediation of claims often provides a plan satisfactory to each side and therefore increases the chances of a speedy, smooth and less expensive confirmation of the reorganization plan. The paper further discusses the usefulness of mediation in resolving a wide variety of bankruptcy-related issues, as well as its disadvantages.
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